Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is a significant shift in how self-employed individuals and landlords in the UK manage and report their taxes. It’s a key part of the government’s drive to modernise the tax system, aiming for increased efficiency and reduced errors. As a self-employed individual, understanding these changes is crucial. HMS Accounting is here to guide you through what MTD ITSA means for you and how to prepare.
What is MTD ITSA?
MTD ITSA builds upon the existing Making Tax Digital (MTD) initiative, which already applies to VAT. It specifically focuses on streamlining income tax reporting for:
- Self-employed individuals
- Landlords with rental income
Under MTD ITSA, you will be required to:
- Maintain digital records of your income and expenses.
- Submit quarterly updates to HMRC using MTD-compatible software.
- File an End of Period Statement (EOPS) and a Final Declaration to finalise your annual income and tax obligations.
Who Does MTD ITSA Affect?
MTD ITSA will be rolled out in stages:
- From April 2026: Self-employed individuals and landlords with annual business or property income exceeding £50,000.
- From April 2027: Those with income between £30,000 and £50,000.
HMRC is still consulting on the implementation for those earning below £30,000 annually, but it’s vital to stay informed about potential future changes.
How Will MTD ITSA Impact You?
- Digital Record-Keeping: If you currently use paper records or spreadsheets, you will need to transition to MTD-compatible software for digital record maintenance.
- Quarterly Reporting: Instead of one annual Self Assessment tax return, you’ll submit four quarterly updates to HMRC, providing a regular overview of your income and expenses.
- Year-End Submissions: While you’ll still finalise your accounts at year-end, the process will be more streamlined through digital tools.
- Increased Transparency: Regular updates provide a clearer picture of your tax liabilities throughout the year, reducing the risk of unexpected tax bills.
Preparing for MTD ITSA with HMS Accounting
HMS Accounting understands the challenges MTD ITSA can present. We’re dedicated to making this transition as smooth and stress-free as possible for you. Our services include:
- Expert Consultation: We’ll explain how MTD ITSA applies to your specific situation and develop a tailored plan for compliance.
- Software Selection and Setup: Choosing and implementing MTD-compatible software can be daunting. We’ll recommend the best fit for your needs, handle the setup, and provide comprehensive training.
- Quarterly Reporting Support: We’ll assist in preparing and submitting your quarterly updates to HMRC, ensuring accuracy and timely filing.
- Year-End Submission Management: From the EOPS to the Final Declaration, we’ll manage your year-end submissions, allowing you to focus on your business.
- Ongoing Support: We are here to answer your questions, resolve any issues, and provide ongoing support throughout your MTD ITSA journey.
MTD ITSA is a significant change, but you don’t have to navigate it alone. HMS Accounting has the expertise to help self-employed individuals and landlords transition seamlessly. Contact us today for a consultation and let us prepare your business for the future of tax reporting.
